Last week in global monetary policy, three central banks raised policy rates (South Africa, Egypt and Ukraine) while two banks (Turkey and Chile) cut their rates as the debate over the U.S. Federal Reserve's eventual interest rate rise intensified. There were three developments surrounding Fed policy that stood last week. First, the Fed's statement in its latest Monetary Policy Report that the share prices of social media and biotech firms appeared "substantially stretched." Second, a series of news stories with major investors and Wall Street financiers calling for the Fed to start to normalize monetary policy and think about rate rises. Third, Fed Chair Janet Yellen's testimony to a Senate committee that included the statement that rates could be raised sooner if the labour market improves more quickly than anticipated. While Yellen's reflections on the labor markets and investors' views of Fed policy are part of the normal evolution of a policy consensus in a democratic society, the Fed's mention of the share prices of two specific stock sectors was a surprise. Economists and central bankers have for years debated how monetary policy should react to booms in asset prices and the risk of financial instability, a debate that most recently hit the headlines following the annual report by the Bank for International Settlements (NASDAQ:BIS). The Fed's statement about the stock prices of social media and biotech firms is thus an example of how central banks initially will react when they perceive that certain assets are inflated.